Car production has been dented as weak trade struggled to pick up in Europe’s biggest economy, after being held back by new and more rigorous emissions tests that came into force in September.
The new WLTP emissions testing regime was brought into effect after the Volkswagen ‘dieselgate’ scandal, which saw millions of diesel motors fitted with software to cheat pollution tests.
It is believed the slump in the German auto sector was down to some car models not having timely approval for a new registration, forcing manufacturers to throttle production.
Reports last month showed new car registrations in Germany fell 30 percent in September year-on-year, a source told Reuters.
The source said 200,000 motors were newly registered in September.
Latest figures today showed the German economy as a whole was thrust into reverse in the third quarter after shrinking for the first time since 2015.
Andreas Scheuerle at DekaBank said: “Germany doesn’t have an economic problem but rather an auto sector problem.
“Due to the sluggish certification of cars, car production had to be noticeably reduced, with collateral damage for other sectors too.”
Writing in a monthly report, Bundesbank economists added: “The associated temporary production losses left a deep mark on industrial production.”
Carsten Brzeski, an economist at ING, described the motoring sector performance as “wake-up call that political stability and strong growth are by no means a given”.
But he added that Germany could expect a rebound in the fourth quarter.
He said in a research note: ”The poor export performance, despite a weak euro exchange rate, suggests that trade tensions and weaknesses in emerging markets could continue to weigh on Germany’s growth performance.”
It is not only a disruption to car production that has damaged the German economy, with the figures today pointing the blame to global trade tensions having a knock-on effect on consumer spending.
Gross domestic product (GDP) stumbled by 0.2 percent between July and September, the Federal Statistics Office said on Wednesday.
It marked the first quarter-on-quarter fall for Germany since 2015 and raised fears that a near-decade-long expansion is crumbling from the inside.
The economy grew by 1.1 percent from July to September in the same period last year.
The Federal Statistics Office said today: “The slight decline in GDP compared to the previous quarter was mainly due to foreign trade developments: provisional calculations show there were fewer exports but more imports in the third quarter than in the second.”
Earlier this month, German government advisers slashed the growth forecast for this year, blaming tougher foreign trade environment.
Growth is predicted at 1.6 percent for 2018, down from the 2.3 percent forecast back in March.
In their report, they attributed the downgrade to “a less favourable foreign trade environment, temporary production issues and capacity bottlenecks are slowing the pace of expansion”.